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Big Oil May Post Record Earnings

Despite crude oil's recent plummet in price, companies such as ExxonMobil, Chevron and ConocoPhillips could see gains of at least 25 percent, analysts report.

October 21, 2008, 08:00 pm

NEW YORK -- While the price of crude oil has fallen $70 per barrel in recent months, it may not stop major oil companies, including Exxon Mobil Corp., Chevron Corp. and ConocoPhillips from posting record profits, according to a Bloomberg News analyst poll.

The biggest U.S. oil companies are expected to report third-quarter gains of at least 25 percent, following crude oil futures prices that climbed to an all-time high above $147 in July, Bloomberg News reported. In addition, profits will stay near or above historic highs in the fourth quarter, making fiscal 2008 the best year ever for the companies due to the inflated prices, according to analysts’ estimates.

Crude oil on the New York Mercantile Exchange traded at 57 percent higher than a year earlier in the third quarter, which more than offsets declining production and hurricanes that affected Gulf Coast production last month, the report stated.

"Even with lower oil prices, these companies still make a lot of money,'' David Foley, who helps oversee $3 billion at New York-based Estabrook Capital Management, including shares of ExxonMobil, Chevron and ConocoPhillips, told Bloomberg News. "Investors are focused on what's going to happen later this year and next year with the economy and oil demand.''

Analysts estimate that ExxonMobil, Chevron and ConocoPhillips will net a combined $22.9 billion in the third quarter, and $88.6 billion this year, a 24 percent increase over 2007, the report stated.

Shares of Irving, Texas-based ExxonMobil dropped 20 percent this year on the New York Stock Exchange, while Chevron, based in San Ramon, Calif., fell 25 percent, according to the report. Houston-based ConocoPhillips is down 35 percent.

Meanwhile, the drop in crude oil prices does not appear to be having an effect on ExxonMobil’s capital spending, which will remain on track for 2008, company CEO Rex Tillerson said during an American Petroleum Institute meeting in Scottsdale, Ariz., yesterday, as cited by Bloomberg News.

"Nothing that we had in our plans has been affected by this change in prices," Tillerson said. "We were never planning on $100, $150 oil."

The credit crisis also has little impact on ExxonMobil "because obviously we carry very low debt," Tillerson added.

The company’s plan to spend $125 billion during the next five years "still looks pretty much in place," Tillerson said, adding capital spending for this year is "pretty much in line" with the company’s forecast of $25 billion, according to the report.

Meanwhile, David O’Reilly, CEO of Chevron Corp., and ConocoPhillips CEO Jim Mulva told Bloomberg News their companies are still formulating capital spending plans for the coming year and will announce intentions in December.